Judge removes Byrnesí attorney privilege
U.S. Bankruptcy Court Judge K. Rodney May recently gave former Island real estate developer Robert Byrne some bad news.
May withdrew the attorney-client privilege that the asset-protection law firm of Presser-Goldstein LLC in Deerfield Beach had with Robert and Arlene Byrne.
After hearing testimony Jan. 21, May ordered that documents created by the Goldstein law firm relating to the transfer of $3.3 million by the Byrnes to offshore accounts be given to bankruptcy trustee Angela Welch-Esposito.
Robert Byrne declared personal bankruptcy in October 2007, while his former company, GSR Development LLC, went into bankruptcy in July 2006. Byrne has since relinquished all right to any assets of GSR.
Lawyers for Goldstein argued that the documents were protected by the attorney-client privilege, but May rejected that argument, finding that the Byrne bankruptcy case was the “exception” to the “crime-fraud” privilege that Goldstein enjoyed when he set up offshore accounts for the Byrnes.
Attorneys for Welch-Esposito argued that Robert Byrne sought Goldstein’s advice to move an estimated $3.3 million into offshore accounts, including up to $1.5 million to an insurance policy.
According to a transcript of the hearing, the primary allegation against Robert Byrne is that “these are fraudulent transfers” in the “creation of structures by Goldstein, his associate and paralegal.”
May said in his ruling that the case was made that “to move money from real estate in this country to the titled name of Mr. and Mrs. Byrne, through several different entities ending up in an offshore insurance company has an indicia of fraud to it.”
In addition, noted May, these transfers were made prior to Byrne declaring personal bankruptcy and could constitute “criminality,” but he made it clear he was not implicating Goldstein.
May also observed that within one year of having assets that produced $3.3 million, Byrne declared to the bankruptcy court he had only $14,000.
Goldstein attorneys argued that the trust and insurance policy were Arlene Byrne’s funds, not Robert’s.
“If it’s her stuff,” said May, “then the estate has the right to inquire and to take its discovery as to whether that allegation is correct or not. I can’t see any harm to having the estate make inquiries of the Goldstein firm as to what she did, Mrs. Byrne did, with her money. And certainly the benefit to the estate outweighs any harm to Mr. Byrne as to the pursuit of her money.”
May clarified that his ruling is only for the attorney-client privilege “as to documents or testimony that can be asserted by Goldstein” his associates and paralegal for the work they did for Robert Byrne in September and October 2006 and beyond.
Attorney Ed Comey, representing Welch-Esposito, told May there was a timing issue to get the documents because, “with the trial coming and Mr. Byrne’s deposition coming upfront,” he needed the documents as quickly as possible.
According to court testimony, the documents in question were given to Comey before May adjourned the court.
Susan Stirling of Comey’s law firm said the upcoming trial is an adversarial hearing brought by Welch-Esposito against Byrne. The hearing is scheduled for 9:30 a.m. Feb. 19 at the federal courthouse in Tampa.
The hearing was originally scheduled for Oct. 3, 2009, but May ordered a delay after attorneys for Byrne requested further time to prepare their case.